Michael Taube: The free market, and not redistribution, is the answer

Sunday

Mar 30, 2014 at 12:01 AM

Capitalism, free markets and globalization are viewed by most western democracies as the best ways to build successful economies. With a good education, hard work, drive and determination, and a few lucky...

By Michael Taube

Capitalism, free markets and globalization are viewed by most western democracies as the best ways to build successful economies. With a good education, hard work, drive and determination, and a few lucky bounces, individuals can achieve all of their hopes, dreams and aspirations.

Yet as some naysayers will undoubtedly argue, this may sound splendid in theory — but does it actually happen in the real world? Paul Krugman, a well-known liberal economist, attempted to use history and progress as examples against this theory.

In a June 13, 2013, New York Times column, Krugman described an incident involving wool workers in Leeds, England in 1876. They protested a new advance in technology, “scribbling-machines,” because they felt it would ultimately hurt their livelihood and devalue their skills. According to the Leeds Woollen Workers Petition, “How are those men, thus thrown out of employ, to provide for their families; and what are they to put their children apprentice to, that the rising generation may have something to keep them at work, in order that they may not be like vagabonds strolling about in idleness?”

Yet the economist argues “a much darker picture of the effects of technology on labor is emerging” today, as it affects highly educated workers as well as less educated workers. In his view, the only way to maintain a middle-class society “would be by having a strong social safety net, one that guarantees not just health care but a minimum income too. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.”

In his last paragraph, Krugman wrote: “I can already hear conservatives shouting about the evils of ‘redistribution.’ But what, exactly, would they propose instead?” That’s a fair question. As a conservative, I firmly believe an open free market is a wiser economic strategy than the redistribution of wealth as a means of advancing society.

Redistribution is nothing more than a simplistic response of increasing the role of the nanny-state as the chief protector. It’s part of a common (and invalid) economic belief that many people can’t handle societal and technological changes — and need to be coddled with government interference, state protection, publicly funded services and financial handouts. For people who support the redistribution of wealth, concepts such as the welfare state, high income taxes and universal health care are the best way to resolve so-called economic inequality.

In my view, the free market is (and has always been) a much better solution. Private individuals and companies have the freedom to hire individuals who they perceive will help benefit them and increase profit margins rather than drag them down the financial abyss. The free market economy therefore helps promote concepts such as small government, low taxes, more private sector initiatives, and greater degrees of economic freedom.

Many countries with free market economies have obviously faced cyclical crises where certain job skills become outdated and new skills need to be enhanced or acquired. Time marches on, societies continue to advance, technology is always improving, and job opportunities are ever-changing.

It’s therefore up to the individual to decide what courses should be taken in university or college to ensure long-term employment rather than short-term interest and pleasure. Earning a bachelor’s degree in philosophy is obviously fun, but there’s no guarantee it will lead to job stability or financial success. If this means more computer science graduates and fewer political science graduates (like me) over time, so be it.

The trick is for people to focus on pertinent job skills training and education that employers currently need, not previous skills and education that used to be required. Companies can also continue to offer help by retraining certain employees, if desired. The main focus must therefore be squarely focused on market realities.

New economic challenges and technological advances will be difficult for some families. There’s no doubt some will struggle mightily. Yet the creation of wealth generation can occur with smart education choices, proper job training, and a realistic position of how today’s world works. The only way this can happen is with a free market economy, and not a foolish, misguided left-wing economic theory like redistribution.

Michael Taube, an occasional contributor, is a columnist and former speechwriter for Canadian Prime Minister Stephen Harper.

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